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| Author: | Evans, Jocelyn Noe, Thomas H. Thornton, John H. Jr. |
| Title: | Regulatory distortion of management compensation: The case of golden parachutes for bank managers |
| Journal: | Journal of Banking and Finance
1997 : JUN, VOL. 21:6, p. 825-848 |
| Index terms: | CHIEF EXECUTIVE OFFICERS MERGERS REGULATIONS BANKING |
| Language: | eng |
| Abstract: | Golden parachutes, provisions of managerial compensation contracts requiring payments to incumbent managers due to mergers or tender offers, are examined from the point of view whether interests of CEOs in the banking industry with those of regulators and shareholders aligned during the eighties. The results provide evidence that boards of directors were opportunistic and adopted golden parachutes prior to large bank failures in order to exploit the FDIC guarantee. The adoption was correlated with poor performance ex ante and ex post and virtually ceased when the FDIC guarantee was withdrawn by FDICIA. |
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